Critics question Beltline officials about land deal 

For a project that's scheduled to be complete in 2032, the Beltline moves pretty damn fast.

Consider, for instance, recent negotiations to purchase the northeast quadrant of the Beltline, a 22-mile loop of transit and trails that will one day circle the city.

That deal – and the history of the controversial plot of land – has resulted in the city parting ways with two developers and paying millions of dollars that critics say was squandered.

Mike Dobbins, a Georgia Tech professor and Atlanta's former planning commissioner, says the city rushed to pay Gwinnett County developer Wayne Mason and his son Keith $65 million for land that could have been had for much, much less.

"Buying out Mason was a flawed proposition," Dobbins says. "I mean, name me anyone who wouldn't love to make a 300 percent profit in three years on a $25 million investment. It's crazy."

Says Keith Mason: "I'm pleased with the outcome."

To make that purchase happen, the city had to pay another developer several million dollars, too – in a deal that one government watchdog claims might not have been legit.

In 2004, the Masons paid $25 million for a 65-acre overgrown crescent of land that stretches four and a half miles from Ansley Park to Old Fourth Ward – the wealthiest quadrant of the Beltline, and the loop's most coveted real estate. The land comprises 20 percent of the Beltline.

Mason offered to give the city 43 acres of the plot for parks and the transit right-of-way. But there was a catch. The Masons' intention for the land – which included a pair of 38- and 40-story towers – was met with a bitter outcry from residents near Piedmont Park, who said the towers were too dense and would cast a shadow on the city's most iconic greenspace.

After two years of heated negotiations, father and son walked away. And, for the time being, the Beltline was a circle missing a crucial arc.

Then, in April 2007, it was reported that the Masons' land had new owners, a group headed by Atlanta developer Ben Raney, of Barry Real Estate.

"It's an unbelievable piece of real estate, and it runs through some of the most valuable parts of the city," Raney told the AJC at the time. "One of the options we have is to work with the city on its vision for the Beltline."

By August 2007, Barry had formed a joint venture with Atlanta Beltline Inc. – the city's nonprofit entity that oversees Beltline planning – to buy the property for $65 million. The plan: ABI would maintain control of the land, and Barry – which kicked in $1.5 million – would help raise money and consult on its development. The joint venture put up $25 million, agreed to pay $450,000 monthly interest payments to the Masons, and promised to settle the debt before Oct. 31, 2008.

Then, the plan hit a serious hurdle. John Woodham, a Buckhead attorney and government watchdog, sued local government over the use of school taxes to fund the Beltline. Woodham's lawsuit triumphed. In February 2008, the Georgia Supreme Court ruled that tax allocation districts – financing mechanisms that use future property tax increases to pay off bonds for infrastructure fixes – could not use educational funds for development projects such as the Beltline.

After that, the credit market tanked, hamstringing Barry's ability to generate capital. To prevent the Beltline property from entering foreclosure – and losing nearly $30 million already paid to the Masons – ABI would have to use already diminished TAD bond funds to settle the debt. And to access those bond funds, the city learned, it needed to buy out Barry.

According to the AJC, a bartering session ensued. Barry came to the table demanding $9.9 million. ABI had originally offered $1.74 million. The two sides then reached a $3.5 million negotiation. Barry also will receive a cut of any property sales ABI makes to a long list of companies and developers with which Barry had discussed deals prior to the buyout. That clause expires Dec. 31, 2011.

Attempts by CL to contact Barry Real Estate were unsuccessful.

Atlanta City Councilwoman Anne Fauver, who represents the district that encompasses most of the property, says she and her colleagues weren't told specifics when Beltline CEO Terri Montague briefed the legislative body days before the Oct. 31 deadline. Fauver says Montague told City Council that disclosing details of the settlement agreement with Barry – including the exact settlement amount – could compromise the deal. The settlement, obtained by CL through an Open Records Act, confirms that.

"I have no idea how [Barry] got to that figure," Fauver says of the $3.5 million. "Yes, the market was going down – it was going down pretty rapidly. For that reason, it seems to me illogical to have paid that much of a profit."

It also might have been illegal, according to the man who nearly derailed the Beltline by challenging its funding mechanism.

Woodham tells CL he's been examining the documents outlining ABI's deal with Barry.

"What strikes me from my initial review of the documentation is that the entire deal may have been facially illegal under state law from the outset," he wrote in an e-mail. "It appears this joint venture deal between a public body and private company could have been a violation of the Georgia Local Government Public Works Construction Law."

The law cited by Woodham stipulates that government entities – including, he claims, the Atlanta Development Authority, ABI's parent entity – can partner with private companies only after "publicly advertis[ing] an invitation for bids."

Woodham says a violation of the law could be a misdemeanor and potentially endanger ABI's tax-exempt status with the Internal Revenue Service – or force Barry to "disgorge" the $3.5 million settlement if bested in court. Woodham declined to say whether he intended to pursue the case. A Beltline spokesperson declined to respond to Woodham's statement.

Beltline leaders, however, say the deal with Barry was a necessary move. "It's a negotiation," says Richard Lutch, the Beltline's finance director. "And we believe it was a fair negotiation. We're positive about the outcome. Overall, we have a key piece of the [Beltline] in our control."

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